How 10 things will change the way you see Two-wheeler Insurance

Apr 02, 2018Anita BegayFeaturedComments Off on How 10 things will change the way you see Two-wheeler Insurance

If you’ve recently bought a bike or a scooter, you’re probably looking for a decent two-wheeler insurance. Chances are, the insurance policy will be advised by the centre or dealership you are buying your vehicle from or your friendly insurance advisor will make himself/herself available for your service. But before you jump into any kind of commitment, you should understand how two-wheeler insurance works and what you are getting yourself into.

Are You for looking for Two-wheeler insurance?

If you’re looking to buy bike or motor insurance, one of the first things you should do is understand that it works differently than other kinds of insurance like health, travel, or commercial insurance. Two-wheeler owners are currently mandated by law to have insurance, especially the need to cover third-party liability risk.

As a result, it isn’t the question of if, but which insurance policy you’re going to buy. So, here’s a low-down on the basis of how bike insurance works before we get deeper into the subject.

#1 Types of plan

There are two basic types of plans available with most insurance companies – basic liability plan and comprehensive cover plan. The basic plan provides only third-party liability coverage, meaning any damage caused to a third-party in case of an accident will be covered by the insurer with costs relating to damage to the vehicle and the driver/owner to be borne by the vehicle owner. This is the minimum insurance coverage requirement as stated by law.

The other, more advanced plan, provides a comprehensive coverage of various scenarios and provides access to numerous add-ons and features which can make life a lot easier for a vehicle owner. The comprehensive plan, though, is more expensive and has a higher two wheeler insurance premium owing to more features available in the plan.

#2 Insured Declared Value

When looking for vehicle insurance, it’s essential that you understand what IDV stands for. It represents the Insured Declared Value or in other words, the amount that the insurance company will provide coverage for, during the term of the policy.

This value is generally arrived at after estimating the state of the vehicle and manufacturers listing price and adjusting depreciation on that amount. The IDV remains fixed during the tenure of the coverage.

#3 Claim processing

This is the most significant aspect of insurance. The claim processing can be done via two methods- cashless and reimbursement. Cashless claims are processed at network garages while reimbursement claims need to be paid by you initially and then claimed from the insurance company.

In case the damage to the vehicle demands costs exceeding 75% of the IDV, the insurance company will allocate the entire IDV after deducting depreciation for the parts. This is called constructive total loss (CTL).

Things which Influence the Premium of Two-wheeler Insurance

Two-wheeler insurance premium is dependent on a number of factors. These factors compositely determine how high or how low you need to pay for your bike’s coverage. Here are some of the most important factors and how they affect the price.

#4 Geographical location

Since the cost of a bike varies from one geographical location to another, so does the cost. As a result, a bike bought in Chennai will have a different insurance premium, then the same model bought in Kolkata or Mumbai.

#5 Make and model

One of the primary factors that dictate the premium is the make and the model. Superbikes, expensive cruisers, or imported bikes have a much higher premium as compared with mid-range or entry-level bikes since the cost of the vehicle and parts help determine the IDV.

#6 Engine volume

Also known as CC, or cubic capacity, it helps determine the coverage value and as a result, the premium for insurance. There are three slabs determined by India Motor Tariff, which are 0-15CC, 150-350CC, and above 350CC. As a rule of thumb, higher the CC, higher is the premium.

#7 Modifications

Insurance companies generally advise against making modifications to bikes, since it elevates the premium. More expensive modifications will need more money to be put into repair in case of damage, which means that the higer premium will need to be more by the owner of the modified bike

#8 Driver’s experience

The experience, age, and gender of the owner are one of the key factors when determining the premium since it dictates the probability of an accident and/ordamage to the vehicle. Generally, owners with less than 1-year driving experience have to pay higher premium.

#9 No claim bonus

For every claim free year, insurance companies award a certain discount on the premium. This is called a No Claim Bonus (NCB). As you have more subsequent years of no-claims under your belt, your discount increases, though most limit it to 50%.

#10 Add-ons

As mentioned previously, top two-wheeler insurance plans have more features and safeguards than a basic plan. Depending upon your need, you can choose your own add-ons, like a zero-depreciation cover or cashless hospitalization or personal accident cover. Depending on these add-ons, the premium will vary.

Conclusion

As you can see, two-wheeler insurance plans might not be as simple as they might have seemed at first. There are a lot of factors that need to be considered when making a purchase decision. So, the next time you’re out buying insurance, you’ll know which factors to consider.